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FAQs

Home Loan

H1: What is a Home Loan?

Home loan is the sum of money a bank or financial institution lends you to help you buy your dream home.
By taking a home loan from a bank or a housing finance company you pledge your home as the lender's security for repayment of your loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it.
Home loans are generally taken for long tenures as the loan amount is usually a huge sum. A home loan can be taken anywhere between 5 and 30 years. The amount of loan one is eligible for is dependent on the individual's credit profile.

H2: What is a down payment? What are the ways in which I can source my down payment?

Generally as a thumb rule, banks or financial institutions lend 80% of the cost of the property. 20% of the money is expected to be paid as a down payment for the loan.
Opting for a personal loan if you can afford that cost as well, pledging your investments, getting loan against your insurance policy etc. are some ways to liquidate your assets and pay your downpayment.

H3: How do I apply for a Home Loan?

You need to submit the application form along with the necessary documents. The bank, after going through your application will review it, ask questions wherever necessary and will also informally tell you the loan amount you are eligible for and the terms and conditions of the same and put across its decision to you. You are as always, advised to shop around for more than one bank so as to get better terms/larger loan amount/lowest interest etc.

D. Income Proof :The following set of documents that detail your credit profile varies according to whether you are a salaried individual or a self-employed individual.

a. Self Employed/Entrepreneurs:

1. A brief introduction of Business/Profession
2. Balance Sheet, p&l account statement of income, proof of income tax returns for the last 3 years certified by a CA
3. Photographs
4. Receipts of advance tax payments if any made
5. A photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act
6. Registration Certificate for deduction of Profession Tax
7. Certificate of Practice
8. Receipts of Bank loans
9. Proof of investments (FD Certificates, Shares, any other fixed asset)

a. If a flat is purchased from the builder, you need the following supporting documents to submit to the bank.

1. Original copy of your flat buyer agreement.

2. Orignal allotment letter.

3. Orignal all builder payment reciept.

4. Tripritite agreement between applicant, builder and bank.

5. Permission to mortgage from builder to bank.

6. Complete chain of property from land allotment to builder.

b. In case you are buying from a Cooperative Society, then ensure you have the following documents in place.

1. Original share certificate of the Society

2. Allotment letter from the Society in your name

3. Copy of the lease deed, if executed

4. Certificate of the registration of the society

5. Copy of the byelaw's of the Society

6. No objection certificate from the Society

7. 7/12 extract or property register card in the Society's name

8. Copy of N.A permission for the land from the collector

9. Search Report and Title Certificate

10. Copy of order under the Urban Land Ceiling Act

11. Copy of the building plans sanctioned by a competent authority

12. Commencement certificate granted by Corporation

13. The latest receipts of taxes paid for the property

14. Original Agreement to assign / Deed of assignment

c. If you are constructing on your own land then you will need the following documents.

1. Original sale deed of land and extract of Index II

2. 7/12 extract or property register card in your name

3. Copy of N.A. permission for land from the collector

4. Search and title report

5. Copy of tax paid under Urban Land Ceiling Act ( obtained from Commissionerate of Urban Land Ceiling and Urban Land Tax )

6. Copy of the building plans sanctioned by a competent authority

7. Building permission granted by the Corporation

8. The latest receipts of taxes paid for your land

9. Estimate of the cost of construction certified by the architect

H5: How is my Home Loan eligibility determined?

Your Home Loan eligibility is determined by your repayment capacity, taking into consideration, factors such as:

Your:1. Income 2. Qualifications 3. Age 4. Spouse's income 5. No. of dependants 6. Stability and continuity of occupation 7. Assets/Liabilities.8. Savings history.

The most important concern of banks in determining your loan eligibility is that whether or not you are contentedly able to pay off the amount you borrow.

H5: What are the steps involved in taking a loan?

There are three steps to a home loan application -

1. Application - You submit a completed application form with all the essential documents.
2. Sanction - You get an approval for a specific loan amount based on the value of your property and repayment capabilities.
3. Disbursement - The loan amount is transferred to the applicant.

H6: How long will it take for the financial institution to contact me after I submit my application?

Most financial institutions will contact you within one business day of your application being submitted.

H7: How long will it take for the financial institution to contact me after I submit my application?

Most financial institutions will contact you within one business day of your application being submitted.

H8: Do I need to contact the financial institution directly?

No, you do not have to contact the financial institution directly. loanmol.com transmits your application to the financial institution of your choice as soon as it is submitted, and the financial institution will usually contact you within one business day.

H9: How long will it take for the financial institution to approve my loan?

Loan approvals are at the sole discretion of the financial institution. The time taken to approve a home loan is usually about a week, subject to the fact that all the required documentation has been submitted to the bank.

H10: How soon will I get my loan amount?

Once all necessary documents are submitted and the paperwork completed, including submission of the post dated cheques (PDC) or signed ECS (Electronic Clearing System) form, the financial institution will usually disburse your loan within seven working days of the loan approval.

H11: What is the range of interest rates offered?

The home loan interest rate varies from banks to banks and normally ranges from 12.5% to 16%.

H12: How is the interest rates calculated on my loan?

Most banks follow the yearly reducing-balance method, which accounts for your principal repayments only at the end of their financial year. As a result, you pay interest on the principal that you have already returned to the bank. The effective interest rate is therefore higher than the quoted interest rate by around 0.7%. Some banks may also follow the daily or monthly reducing-balance method, which results in a lower interest burden.

H13: What are the bases of interest rates calculation?

The interest on Home Loans is usually calculated on Monthly Reducing or Yearly Reducing balance. In Monthly Reducing Balance, the principal on which you pay interest reduces every month as you pay your EMI. However in Yearly Reducing Balance, the principal is reduced at the end of the year, therefore you continue to pay interest on a certain part of the principal which you have actually paid back to the bank, which basically means the EMI for the Monthly Reducing system is effectively lesser than the Yearly Reducing system of calculating the interest.

H14: What is the Fixed Rate of Interest?

Fixed Rate of Interest means that the interest rates remain FIXED for the entire duration the loan. This basically means that you do not benefit, even if the rates of interest drop in the market.

H14: And Floating Rate of Interest?

This is the rate of interest that fluctuates according to the market lending rate.

Personal Loan

P1: What is a Personal loan?

A personal loan is an unsecured loan. That means you don't have to put up any collateral, as with a car loan or a home loan, where the underlying asset is mortgaged with the lender. Normally, the lender does not ask for guarantors either. More advantages: minimum documentation and speedy clearance (within three to seven days of applying). And there is no monitoring of 'end use' -- you can use the loan for any purpose you like. But you've tried applying for a personal loan, you've probably been told all this before. What you weren't told: although this loan is generally an unsecured product, some banks do ask for collateral and guarantors. So the form of the product across the industry is by no means standard. Expect variation in the terms and conditions as well as the eligibility conditions across different lenders.

P2: How do I take a personal loan?

Most of the nationalised, foreign and co-operative banks offer personal loans. Besides banks, some other finance companies and financial institutions also offer them. Find out the eligibility criteria and the documents required to submit before you apply.

P3: Who can avail a personal loan?

Salaried individuals

Self-employed professionals

Self-employed non-professionals

Any salaried individual/self-employed professional is eligible for a personal loan and the amount of loan eligibility will differ based on the person's current earnings.

P4: What is the maximum tenure of a personal loan?

Personal loan is a short tenure loan. Most of the banks provide you loan for maximum 3 years (36 months). to max 5 years(60 months).

P5: How much personal loan that i can take?

Loan eligibility depends upon various factors. The main factor is your ability to repay. The bank would like that the instalment you pay should not exceed more than 30 to 40% of your net salary or 2-3 times of your income tax return. Please check the eligibility section (hyper link)of our site to know how much you can borrow.

P6: How soon will I get my loan money?

Usually banks promise to disburse your loan within seven working days. However to avoid further delay, it is recommended to keep all your documents ready, especially the post dated cheques (PDC).
Banks from where you provide your PDCs require at least a day or two's notice to give you the cheques. The loan is disbursed only after the completion of all required documents are submitted.

P7: Will I need to provide any collateral for my loan?

Personal loans are especially designed for people who don't want to go through the hassles of providing security or hypothecation. This is a total unsecured loan where no form of collateral or guarantee is taken. However in case of software professionals, some bank do ask for a guarantor or a co-applicant.

P8: How do I repay my loan?

At the time of applying for the loan, banks ask you to submit all the post dated cheques (PDC). The numbers of cheque leaves depend upon the tenure you opt. There is an option of prepayment after completing the lock-in-period of 6 months where you only have to pay the outstanding principal. However the option of part payment is not available.

P9: What are the fees and charges payable and when are they payable?

Apart from the rate of interest bank also do charge some fees which are of Usually two types. Once when you are applying for the loan and once when you are preclosing the loan. The fees when charged at the time of processing called as Processing Fees vary from 2-3% of the loan amount. This could be reduced if you have the ability of bargaining. the second charge is the prepayment penalty paid at the time of preclosure. This too varies from 2 –3 %. Similar to processing charges, you can also try to get this fees reduced.

P10: What is the rate of interest that will be charged on my loan?

The interest rate varies from bank to bank. And usually it varies from 14%-26% depending upon your profile and the policies/scheme you opt for.

P4: How soon can I get my loan money?

Usually banks disburse your loan within seven working days. However, it is recommended that you keep all your documents ready and in order, especially the post dated cheque (PDC), to avoid any delays. The loan is disbursed only after the completion of submitting of all required documents.

P4: Can I apply for loan, jointly with my spouse?

Yes. Personal Loans can be applied jointly with a co-applicant (either be your spouse or your parents). This helps you to increase your income eligibility and you can also avail for a larger amount of loan, if you want to, as your co-applicants income also gets added to your income and that total is taken into consideration for calculating the loan amount you will be eligible for.

P4: What is relationship discounts?

Lenders offer relationship discounts if you already have a relation with that bank. This basically means that if you are already banking with the lender from whom you seek to avail a loan, they give you certain discounts in the form of reduction in personal loan interest rates or other such charges, sometimes even giving you additional services.

Credit Card

C1: What is a Credit Card ?

Credit card is a financial arrangement where you borrow money from a lender and pay it back in the near future, at the set terms, pre-decided payment schedules, the minimum payment, levied interest of rate you not only pay the borrowed amount, but also an extra towards rate of interest.
These repeated valid transactions shape into credit score forming. The card numbers prefix, Bank Identification Number abbreviated to BIN the digits at the beginning of the number determines the bank to which the credit card number belongs. The first six digits are for MasterCard and Visa Cards, followed by the individual account number and the final digit is a validity check code.

C2: What is a Credit Limit?

The 'Credit limit' is the maximum amount you can spend or borrow using your Credit Card. This limit is determined by various personal details like your income, source of income etc. The credit limit is normally raised or lowered depending on your previous years track record in terms of spending and repayment.

C3: Does the add-on card have a separate credit limit?

No, the add-on card member shares the same credit limit as assigned to the primary card member.

C4: Can I use my credit card for expenses on the Internet?

Yes, your credit card can be used for expenses on the Internet. However, the Reserve Bank of India prohibits its use for certain expenses on its banned list like football pools, sweepstakes and lotteries.

Loan Against Property

L1: Who can avail a Mortgage Loan?

Both Salaried as well as Self-Employed people can avail Mortgage Loan, irrespective of the income.

L2: Which factors determine the eligibility of a mortgage loan?

The general factors taken into account while determining the eligibility of loan against property are listed below:

You can get a LAP up to 80% of the registered value of your property depending on the Bank's policy and the property type and valuation.

L4: How would the value of my property be determined?

The value of the property would be determined through a valuation conducted by the Loan Provider.

L5: What is the difference between a Home Loan and Loan against Property?

There is a huge difference between a Home Loan and a Loan against property. Home Loan is taken only for the purpose of buying a residential property whereas a Loan against Property can be taken for any purpose.

The processing of the loans usually takes 7 to 10 working days once all the documents are submitted. It also depends upon your profile and documentation.

L10: Does the property have to be insured?

Yes the property has to be insured against fire, flood, earthquakes and other appropriate hazards during the tenor of the loan.

L11: How can I repay my loan?

The repayment of loan is done through Equated Monthly Installments. It can be paid through Post Dated Cheques (PDC) or Electronic Clearance System (ECS).

L12: Can I pre-pay my loan?

The loan against property can be pre-paid.

Business Loan

B1: What is the interest rate for business loan?

The interest rate is calculated based on your principal amount and your credit score. But as a business owner, you know that cash-flow is what counts and your monthly payment should be affordable. Sriloans will provide the interest rate for your business loan.

B2: What documentation will I need when I submit my loan application?

For start-ups, you will need a business plan, projections and assumptions on which the projections are based. You will not have business tax returns or financial statements. For credit-based loans, only an application is required.

B3: What are the disadvantages of using business credit?

New business owner is required for guarantee the car. This is often asked by many credit card companies. So the business credit card appears on the business owner's personal credit. Business card may be reported by your name personally or under business name. So make sure about the clarifications.